Jim Caron on structural change, deglobalization, and AI investing (with Carol Massar, Tim Stenbeck)

The post-Bretton Woods globalization model is dead. The new regime is state capitalism, where industrial policy (CHIPS, IRA) directs capital flows. This is a structural break, not a cycle. The playbook is to front-run policy shifts and identify beneficiaries of deglobalization and tech innovation. AI adoption is exponential; the trade is not just chips, but value companies embedding AI to unlock massive operating leverage. Be a policy chameleon.

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Morgan Stanley 8.5
Investment Bank $1600.00B
Jim Caron 9.2

Jim Caron on structural change, deglobalization, and AI investing (with Carol Massar, Tim Stenbeck)

Carol Massar

Introduces Jim Caron, CIO of Portfolio Solutions at Morgan Stanley Investment Management, to discuss the US-China meeting and its implications for investors.
Jim Caron

The US-China meeting is about great powers deciding new rules for the world. The world needs a new growth model, moving away from the US running deficits to subsidize other countries' growth. This is a major structural change putting money in motion.
Tim Stenbeck

Questions if the 'world is flat' globalization model has failed, and if the new environment is more transactional.
Jim Caron

The post-Bretton Woods rules-based order of globalization is unwinding. The new environment is 'selective globalization' and highly transactional, not based on virtuous adherence to past rules.
Carol Massar

Asks if we will see more 'state capitalism' like the US is doing with industrial policy.
Jim Caron

State capitalism is the foundation of this investment theme. Governments incentivize the private sector to generate growth through policy (tax codes, depreciation, deregulation). This is great for investors as we buy the companies making the change.
Carol Massar

Asks what it means to 'get ahead of the money' regarding the AI trend.
Jim Caron

Getting ahead of the money means using a conceptual framework (deglobalization, reindustrialization, tech innovation, state capitalism) to understand what drives capital. It's about figuring out which sectors and companies benefit from policy changes and who is adopting technology to unlock operating leverage.
Tim Stenbeck

Asks how much of this is driven by politics, especially with midterms approaching.
Jim Caron

The trend doesn't go away, it just changes. Under Biden it was the CHIPS Act and IRA. Under Trump it changes. An investor must be a chameleon and adapt to the new administration's policies.
Carol Massar

Asks what the Cerebus IPO represents for the market.
Jim Caron

The Cerebus IPO is emblematic of demand for chips for inference and embedding AI into businesses. The AI adoption rate is going exponential. The greatest opportunity is finding value companies incorporating this technology.

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